What if Puerto Rico becomes part of an already existing state?
That is a Twitter suggestion, and I believe this option warrants serious consideration.
The obvious candidate would be New York State, and of course New York could be given more federal funds to ease the fiscal burden. The state would have more representatives in the House, but there would be no gain of two Democratic Senators for Puerto Rico, which might limit opposition from the Republican Party. Puerto Rico also might be given some special dispensations regarding the Spanish language and some other cultural markers.
I am not sure how Puerto Rico would feel about such an arrangement at this point, but under many alternative arrangements a big chunk of the island’s population simply empties out, and much of it to New York at that.
On the other hand, Puerto Rico + Alberta could make 52…sorry Monique!
Addendum: As for the shorter run, here is one report of relevance:
While the federal government continues to calculate a damage estimate, responders deployed to the region are focused on logistics like getting food and water to millions of people who remain without power as temperatures hit 90 degrees and humidity hovers above 70 percent.
The administration contends that much of Puerto Rico and the Virgin Islands is so damaged that officials can’t even begin damage assessment, meaning the federal government may not know for weeks how many roads, buildings or power lines will need to be rebuilt.
“The issue is not paying for any of this,” the administration source said. “It’s like: Paying for what?”
Here is the power supply, before and after the storm. I’ve seen informal reports that over 40 percent of the island does not currently have usable drinking water. Or what about people who need medications or dialysis? Here are some photos.
The basic model for Puerto Rico isn’t working any more
That is the topic of my latest Bloomberg column, here is one bit:
Worse yet, the island has about $123 billion in debt and pension obligations, compared with a gross domestic product of slightly more than $100 billion, a number that is sure to fall. In the last decade, the island has lost about 9 percent of its population, including many ambitious and talented individuals. In the past 20 years, Puerto Rico’s labor force shrank by about 20 percent, with the health-care sector being especially hard hit. The population of children under 5 has fallen 37 percent since 2000, and Puerto Rico has more of its population over 60 than any U.S. state.
And then came Hurricane Maria. According to a recent NYT piece, almost half of American’s don’t know that Puerto Ricans are American citizens.
In my considered opinion, using government money to help Puerto Rico has a much higher humanitarian return than devoting it to the further subsidization of health care.
Tuesday assorted links
1. Do conditional cash transfers work less well in the United States?
2. Earlier presidential interventions into football. And basketball fans are the most left-leaning group of sports fans, GS Warrior fans I suspect all the more so.
3. More on the Italy-Libya equilibrium.
4. The new venture of Ben Casnocha and Erik Torenberg.
5. Eminem markets in everything.
6. The pragmatic case for understanding neurodiversity, recommended.
7. David Brooks understands (NYT).
NBER conference on Artificial Intelligence
Here is the program, here are the videos, many luminaries were present. My role was to comment on Korinek and Stiglitz.
Joshua Gans has set up a website to curate research into this topic.
Do we really need to play the Star-Spangled Banner so much?
I say no, in my latest Bloomberg column. Here is one bit:
We live in a country where very often the concession stands don’t stop operating during the anthem, nor do fans stop walking through the concourse. We’re fooling ourselves to think that current practices are really showing respect for the nation or its military.
And:
Anthem practices shouldn’t be viewed as sacrosanct, and no one would think the absence of an anthem unpatriotic if expectations were set differently. Professional sports don’t start their competitions with the Pledge of Allegiance, and that is hardly considered an act of treason. Nor do we play the anthem before movies, as is mandatory in India. Furthermore, “The Star-Spangled Banner” wasn’t sanctioned by Congress as our national anthem until 1931. Earlier in the history of baseball, the anthem was played during the seventh-inning stretch. It was only during World War II that the anthem was played regularly at the beginning of each game, rather than for special games alone, such as the World Series.
Might we consider moving back to some of these earlier practices? To play the anthem before the players are present or during a mid-game break, or perhaps to cease the practice altogether?
Finally:
The awkward, hard-to-admit truth is that the American national anthem is a form of right-wing political correctness, designed to embarrass or intimidate those who do not see fit to sing along and pay the demanded respect.
Here is a piece by Cass Sunstein also on the theme of right-wing political correctness.
Monday assorted links
1. Are U.S. three-year-olds more willing to ask for help?
2. US and UK both report trade surplus with each other (FT).
3. Albino orangutan.
4. Reserve private bathrooms across NYC with a new app.
5. The Feds move against Western Governors University.
The Raj Chetty course “Using Big Data to Solve Economic and Social Problems”
Syllabus, slides, and videos of the lectures, here you go.
Germany fact of the day
Was banning Indian child labor counterproductive?
The authors are Prashant Bharadwaj, Leah K. Lakdawala, and Nicholas Li, and here is the abstract:
While bans against child labor are a common policy tool, there is very little empirical evidence validating their effectiveness. In this paper, we examine the consequences of India’s landmark legislation against child labor, the Child Labor (Prohibition and Regulation) Act of 1986. Using data from employment surveys conducted before and after the ban, and using age restrictions that determined who the ban applied to, we show that child wages decrease and child labor increases after the ban. These results are consistent with a theoretical model building on the seminal work of Basu and Van (1998) and Basu (2005), where families use child labor to reach subsistence constraints and where child wages decrease in response to bans, leading poor families to utilize more child labor. The increase in child labor comes at the expense of reduced school enrollment. We also examine the effects of the ban at the household level. Using linked consumption and expenditure data, we find that along various margins of household expenditure, consumption, calorie intake and asset holdings, households are worse off after the ban.
I’m not trying to talk you into child labor with this post. Rather, you should be less confident in a lot of your moralizing about what is a good policy or an evil policy.
Hat tip goes to Dev Patel.
What I’ve been reading
1. The New Testament, translated by David Bentley Hart, Yale University Press. I’ve spent a good bit of time with this book, and if you own and read a few New Testaments, this should be one of them. It is the most accurate translation conceptually and philosophically, taking care to render the Greek of that period as faithfully as possible. It doesn’t try to make the text “read nice,” nor does it make all of the books sound the same. Of course, with any Bible translation you care both about a) what the authors really meant, and b) what other readers of the Bible thought they were imbibing. By the very nature of its virtues, this volume is weak on b) precisely because it is strong on a), and thus it probably should not be your first translation. Still, if you are tempted, this is more and better than “just another New Testament.”
2. Richard McGregor, Asia’s Reckoning: China, Japan, and the Fate of U.S. Power in the Pacific Century. I am sick of books on these topics, because they tend to repeat the same old same old. This one has fresh content on almost every page, and it is especially strong on explaining how the revisionist history debates in China and Japan fit into domestic politics and also foreign policy.
3. Barry Hatton, The Portuguese: A Modern History. “Portugal largely missed the Enlightenment.” This is the best introduction I know to that charming country. In 1986, Portugal had only 123 miles of highway. It had not occurred to me, by the way, that the 1974 coup was the first Western European revolution since 1848, unless you count the Nazis. Here is a picture showing Portugal as an Atlantic rather than Mediterranean economy. Explanation here.
4. Nils Karlson, Statecraft and Liberal Reform in Advanced Democracies. How did liberal reforms happen in Australia and Sweden? This book tells you about the world, rather than the theory or the taxonomy. There should be many more books of this sort, a study in actual public choice.
Arrived in my pile is:
Barry Eichengreen, Arnaud Mehl, and Livia Chitu, How Global Currencies Work: Past, Present, and Future.
For economic historians I can recommend Bruce M.S. Campbell, The Great Transition: Climate, Disease and Society in the Late-Medieval World.
China fact of the day
China’s 89 unicorns (startups valued at $1bn or more) are worth over $350bn, by one recent estimate, approaching the combined valuation of America’s (see chart 2). And to victors go great spoils. There are 609 billionaires in China compared with 552 in America.
That is from The Economist, mostly about Chinese innovation.
Sunday assorted links
2. New Zealanders worry about their country’s pristine nature, given the onslaught of tourism and globalization. By the way, the NZ election results shows how proportional representation can be a bad system when the checks on nutty party opinion are otherwise weak. Imagine Winston Peters holding the balance of power, and perhaps not even being the nuttiest candidate in the race. This time, the Maori Party went to zero seats, the semi-libertarian ACT won one seat. NYT report here.
4. Ferroequinologists: India has a bunch of them. Recommended.
5. ESPN profile of Hou Yifan. And chess grandmaster Lev Alburt advises the financial community in NYC.
George Will covers *The Complacent Class*
Here is one paragraph:
Although America is said to be — and many Americans are — seething about economic grievances, Tyler Cowen thinks a bigger problem is complacency. In his latest book, “The Complacent Class: The Self-Defeating Quest for the American Dream,” Cowen, professor of almost everything (economics, law, literature) at George Mason University and co-author of the Marginal Revolution blog, argues that the complacent class, although a minority, is skillful at entrenching itself in ways detrimental to the majority.
Here is the whole review.
Solve for the Italian-Libyan equilibrium
Failing to stem the tide of refugees arriving Europe, Italy and the rest of the European Union have agreed to pay Libya’s Government of National Accord (GNA), the UN-backed interim government that is struggling hold control of the country, to keep them from arriving in Italy and instead put them into detention camps in Libya.
The accord signed Feb. 3, provides for Italy to pay €220 million ($236 million) to the Libyan coastal guard and provide training to help them catch the vessels—primarily rubber dinghies. The Libyan coast guard will be charged with sending the boats back to Libya and putting people into camps. The political instability of Libya is such that there would be little guarantee of the conditions in which the migrants would be kept, according to Arjan Hehenkamp, general director of Médicins Sans Frontières (MSF).
Here is one story. In Libya they understand the Coase theorem:
A security source in Libya spoke to Associated Press late last month saying: “Yesterday’s traffickers are today’s anti-trafficking force.”
I believe the size of the Coasean payments will rise. If Libya is paid to halt migrants, and finds this a satisfactory or indeed even profitable arrangement, they also will act to…boost the supply of potential migrants. “Producing potential migrants” will at some point become one of their more significant economic sectors. And the larger the number of bottled up would-be migrants, the more Italy and/or the EU will pay to stop them.
Yet what is Italy otherwise to do? I find it striking how underreported this story has been.
Intellectual fallout from the likely failure of Graham-Cassidy
1. The Democrats were debating single payer while this bill, which they dread, nearly passed (and still has some chance of passing). This was not a random mistake, rather it reflects a more general tendency of the Democratic Party to focus on the wrong kind of expressive values, in a manner which does not seem remediable. We need to re-model what they are, and build this kind of un-educability into the new model.
2. One lesson of Graham-Cassidy failure is that American health care, at the state level, is a race to the bottom not to the top. Recall that the Canadian health care system also leaves key decisions to the provinces + block grants, but American Progressives love the results. Most observers know the American states would not copy the Canadian provinces in their policies, and it is not only because fiscal equalization is weaker to the south. The reality is that spending much more on health care would not make most American states much more desirable places for most people to live in. If it did, Graham-Cassidy would be a better idea than in fact it is and a race to the top would ensue. Better health care would brighten up states all around, attract more population, and increase the revenue going into governor’s coffers.
Democrats and Republicans both find this inadequacy of state-level outcomes difficult to accept, though for opposing reasons. Democrats hate having to recognize that all the extra health care spending might be mainly redistribution rather than remedying a market failure or providing a broad-based social public good. Republicans hate to see that giving states control over health care policy, and allowing them to revise Obamacare, won’t improve those states and probably would make most of them worse.
Of course my points #1 and #2 relate. I agree Graham-Cassidy is a bad idea, but every time I hear the critics say it is heartless, or would “take away” people’s health insurance, or “kill people,” what I really hear is “If we let everyone vote again on Obamacare, with a real time balanced budget constraint, they wouldn’t vote for nearly as much health care next time around.”
Which is why you should not be obsessing over single-payer systems.
Across the board, pondering Graham-Cassidy, including its failure, should make you more pessimistic about economic and social processes.